All posts tagged FirstGroup

European stocks are plodding. Volumes are light as investors wait for news on the euro-zone’s sovereign debt crisis, a boost to global growth and agreement among U.S. lawmakers on the budget. They shouldn’t hold their collective breath.

In the meantime, for investors looking for a steer, here’s our pick of today’s broker notes.

Morgan Stanley has taken a look at U.K. transport stocks, downgrading Stagecoach Group and FirstGroup. Go-Ahead Group has been upgraded.

Morgan Stanley forecasts limited organic growth at most bus businesses. It sees improving visibility for U.K. rail refranchising, but said new tenders are unlikely to happen before the second half of 2013. In addition, the brokerage notes pension accounting changes.

It said the bus and rail companies will adopt new rules on pensions accounting at the start of the next fiscal year, accounting for pensions “far more prudently”.

“Overweight” rated National Express Group is the brokerage’s top pick.

European financial markets reacted quietly to news that euro-zone finance ministers finally came to an agreement on Greece’s next aid tranche, clearing the path for billions of euros to reach the nation by December.

Financial analysts calmed down after the shock appointment of Mark Carney as the next governor of the Bank of England.

In the wake of the appointment, UBS took a look at U.K. banking stocks.

UBS upgraded Royal Bank of Scotland to “buy”, saying that Mr. Carney’s appointment sets the scene for a more conciliatory U.K. regulatory environment.

European stock markets wavered Thursday, with investors reluctant to make any bold moves ahead of the European Central Bank rate announcement. Escalating tensions in the Middle East weren’t exactly helping sentiment either.

Against this background, the City’s number crunchers have been busy penning their views on Europe’s top companies. Here’s a snapshot of what they’re saying this morning.

FirstGroup is the star of the show after the West Coast rail contract fiasco. Perhaps surprisingly, given the transport company has lost out on its hard won but now torn-up contract to run the busy rail service, the views expressed aren’t all downbeat.

FirstGroup is the subject of three ratings changes Thursday, only one of which is a downgrade.

HSBC cut the stock to “underweight” from “neutral”, saying that the focus is now likely to shift back to the company’s finances. It remains cautious about the outlook for rail generally on the higher risk profile of new U.K. franchises.

It has also put three other rail franchise competitions on hold that were due to be announced in the next few months, throwing the whole system into disarray.

The fiasco is deeply embarrassing for Prime Minister David Cameron at a time when his government is trying to kick-start the economy by wooing companies to invest in big infrastructure projects with billions of pounds in government guarantees.

It’s not great news for FirstGroup–which was awarded the now torn-up contract–either.

Europe’s financial markets are treading water this morning, with investors concerned about Greece’s borrowing. There was some cheer after Der Spiegel reported that the European Central Bank is considering setting limits on yields of euro-zone sovereign debt by pledging unlimited bond purchases.

While investors await further details on the euro zone debt crisis, City analysts have been scratching their heads for stocks to promote and those to reduce.

Here’s a pick of what they’re recommending this morning.

U.K.-listed miner Eurasian Natural Resources Corp was among the top fallers on the list of FTSE 100 stocks Monday. Credit Suisse downgraded ENRC to neutral from outperform as it expects earnings to weaken substantially over the next 12 months and warned that the company’s balance sheet is stretched.

This follows company’s first half trading update on August 15. ENRC said that it was reviewing its future growth plans as earnings were hit due in part to falling commodity prices and higher costs.

Keeping with the mining sector, Deutsche Bank takes a critical look at the most high profile company in the sector right now. DB has cut Lonmin to sell following unrest at the Marikana mine in South Africa. DB’s analysts have calulated that Lonmin will lose a minimum of 50,000 ounces of platinum production, with the impact likely to spill over into next year.

Yep, we’re in the dog days of summer. Most of Europe’s still on holiday. Stocks are bouncing around in tight ranges, amid low volumes.

However, there’s still a fair amount of corporate news around, prompting the City’s scribblers to put pen to paper.

Here’s our picks of this morning’s broker notes.

Many delighted in seeing Richard Branson lash out yesterday after his Virgin Rail Group joint venture lost control of a key rail route to rival FirstGroup. However, concerns have already emerged about FirstGroup, sending its shares down 6.1% on Wednesday.

FirstGroup has subsequently been downgraded to underweight from equalweight by Morgan Stanley. The brokerage acknowledges the successful contract win for the U.K.’s main London to Scotland rail route.

However, it sees this as a short-term gain. Its analysts said:

“We think FirstGroup’s winning bid for the West Coast franchise is based on ambitious assumptions and is therefore risky. Small changes in operating assumptions could turn this franchise very free cash flow negative for FirstGroup.”

Morgan Stanley also continues to have concerns about a turnaround in the bus business. It is not sure that the near-term annualized free cash flow from West Coast of £30 million ($47 million) will be used to fund the turnaround investments needed in the bus unit.

Moving over to brewing, the kind of business you’d expect to do well over the summer, Carlsberg has been downgraded to hold from buy by Deutsche Bank, saying that the risk/reward is now more evenly balanced for the beverages company.

Europe’s financial markets continue to hold their ground early Thursday ahead of the European Central Bank’s decision on monetary policy, even though analysts are mostly pessimistic that we’ll see decisive action from ECB president Mario Draghi and his colleagues on the governing council.

City analysts have been focusing on the Italian banking sector, utilities and transport stocks. Here’s our pick of today’s broker notes.

ING has taken a look at the Italian banking sector Thursday, saying these banks have one of the largest non-performing loans piles in the EU, while low profitability prevented provision growth to match that. As a result, ING’s number crunchers conclude that it is not possible to justify a buy recommendation in this sector.

They’ve therefore downgraded Intesa Sanpaolo to hold from buy, while initiating coverage on UBI Banca with a sell rating.

Stock investors are back to their desks after an extended Easter weekend break, but they’re certainly not happy bunnies.

Disappointing news from the U.S., in particular Friday’s payroll data, is dampening spirits. Markets are responding in a cautious manner, reassessing the probability that the Fed may need to re-load its ammunition to shore up the U.S. economy once again.

Corporate earnings are again relatively light, leaving investors to chew over the day’s equity rating changes.

Here is our selection for Tuesday:

Swiss bank Credit Suisse has started coverage on French industrial group Bouygues with an underperform recommendation. The bank said construction growth is set to decelerate in 2012 and beyond.

There’s been a rush of European equity rating changes Thursday. Here are our top picks for the day:

• Firstly Nomura has focused its attention to trends in European transportation. It has upgraded Deutsche Lufthansa to buy from neutral and downgraded Ryanair to neutral from buy.

Nomura’s analysts said:

“While airlines are a risky trade, we think a combination of more realistic forecast assumptions, attractive valuation and lowering capacity growth plans makes the sub-sector more attractive.”

• In a huge review of the transport sector, Nomura has also downgraded, deep breath, A.P. Moller-Maersk to neutral from buy, Aeroports de Paris to neutral from buy and FirstGroup, PostNL, Panalpina and TNT Express to reduce from neutral.

Nomura concluded:

“With the outlook for volume growth finely balanced between sub-trend growth and a double dip, and visibility as poor as we can remember it, we retain cautious forecasts at the start of 2012.”

• Moving swiftly on, Societe Generale has downgraded Antofagasta to sell from hold. The brokerage thinks the valuation is “stretched” with the stock up by around 42% over the last four months. Societe Generale also warned that Chinese copper imports have been unusually strong in the past three months but there is now potential downside risk to copper demand. Finally, it said copper mine supply is expected to grow by more than 7% in 2012 after several years of near zero growth.